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Now another blow: Families face 14% gas price hike after major pipeline leak

Posted on 12:05 AM by Sameer Shah



Families face even higher energy bills this winter following a massive rise in the price of gas.

A leak in a key Norwegian pipeline has sent the wholesale price of supplies to the UK soaring by 14 per cent, raising fears of winter shortages.

The firm in charge of the North Sea pipeline said it could be shut down until next spring.

The news will come as another major blow to cash-strapped households, who have suffered big rises in food and energy bills over the past year.

British Gas recently announced another 35 per cent increase, with rival EDF upping bills by as much as 22 per cent.

The latest price jump underscores Britain's growing dependence on overseas gas suppliers as North Sea reserves dwindle.

About 40 per cent of the gas used here will be imported this year, up from 27 per cent in 2007.



The UK is highly exposed to even the smallest supply disruptions because it lacks adequate storage, with only 13 days of stocks compared to 99 in Germany and 122 in France.

Experts warned that unless wholesale prices fall soon, major suppliers will be forced to put up their charges again.

Analyst David Hunter, of energy consultancy McKinnon&Clarke, said: 'The amount of gas available for export from Norway will be cut significantly. The UK will be left to negotiate with Russia and the Far East or risk running low on energy.'

The prospect of another rise in bills will provoke anger as energy companies are currently posting record profits on the back of increases in the price of crude oil.

British gas owner Centrica saw profits at its gas fields in the North Sea rise from £123million to £638million in the last six months, while its gas supply arm brought in a profit of £992million.

Meanwhile, the average British Gas 'dual fuel' bill - for both gas and electricity - is already above £1,300 a year. This is up by more than £400 since January.

A spokesman for watchdog Energywatch warned last night: 'There'll be no respite for consumers from higher energy bills.

'For the four suppliers who haven't raised prices for the second time this year (nPower, E.on, Scottish&Southern Energy and Scottish Power) it's now a matter of how much they will increase bills and when.'

While Centrica and its rivals are cashing in from household bills, more and more Britons are falling into fuel poverty, which is defined as spending over ten per cent of disposable income on heat and light.

There are already an estimated 4.5million in fuel poverty, but the figure is expected to rise by at least a million this winter.

'UK consumers really could have done without this,' said Damien Cox, senior energy analyst, at John Hall Associates, an independent energy consultancy.

'It's not a serious supply issue at the moment because demand in August is low but it does raise the likelihood of problems this winter.'

Centrica spokesman Mish Tullar said last night: 'Norway has the capability to provide 25 per cent of the UK's gas, but at this stage we can't tell the scale of the impact from the leak.'

The pipeline where the leak was found pumps gas from the Kvitebjoern field in the North Sea.

An estimated five per cent of Norway's total gas output goes through it.

Pipeline operator Statoil Hydro said the shutdown would impact on its production this year, but gas customers are 'not likely' to be affected.

Historically, the UK has benefited from lower gas prices in the summer, due to domestic overproduction and easily available imports.

But with gas and oil now viewed as scarce resources, there has been more intense competition for supplies from the Continent.

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